From the Director's Desk: Our Existential Threat – Follow Up, October EIA Data Recap
Our Existential Threat – Follow Up
My comments in the last edition of the Pellet Wire excited more responses than is normal and I want to thank everyone who reached out. I’d like to expand on and possibly amend some of my commentaries. First, I would like to reiterate that I believe the biggest long-term threat to the wood pellet for space heating business is anti-biomass and/or anti-combustion sentiment. I’m realizing now that lumping those two together unnecessarily blurs the lines and might even confuse the picture. Second, I realized upon a second reading that I asserted that the most critical audience for our industry to get in front of and bring over to “our side” is consumers. In a few of my responses to the people that reached out to me, I walked that sentiment back a little bit. Here’s why:
- The enormity of the consumer audience. The U.S. Census Bureau puts the U.S. population at 333 million. Too big? Let’s look just at homeowners, you say. The same census reported 142 million housing units. Both of these audiences are enormous and the cost of reaching this audience outstrips even the most well-funded organizations. In committee and board conversations we often use the “Got Milk” campaign as a stand-in for a public awareness campaign. This enormously successful campaign with significant reach in mainstream media outlets is propelled forward by an over $20 million a year check-off program.
- Our understanding of what motivates the consumer audience. Disclaimer: I am not suggesting that there aren’t consumers out there very motivated by their beliefs about climate change and their embrace of policies aimed at our go-forward energy strategy with respect to those beliefs. I’ve included a link to a report on some research by the Pew Center (see Industry News) that makes it very clear that millennials are motivated by their opinions on climate change. Dig deeper into that research however and the nuances start to pop out. First, nearly two-thirds of Americans favor a more blended want to “use a mix of sources” to meet the country’s energy needs. Finally, I’d highlight point #5 in that report as I think it highlights how incomplete the conversation about, well anything, is on social media. Point #5 includes an infographic that makes it clear that the urgency and fervor for climate action that appears on social media stands in sharp contrast with the opinions and attitudes of the average citizen walking around. Consider this, 77% of social media users engaged in climate discussions on social media are “Anxious about the future” while just 32% of adults not engaged in those discussions report the same anxiety. I mention this because social media is attractive because of its relatively low cost of entry, but is it an accurate cross-section of the sentiment of the country. Statistics like those (and others in the report) make me wonder.
- The consumer audience is a distraction from the audience that matters. A consumer deciding towards or away from wood pellet heat represents a gain (or loss) of one pellet user. Conversely, a regulator or a state energy staffer charged with decarbonizing the state’s economy that fails to understand the carbon benefit of wood pellet production and use could negatively impact the prospects for future appliance sales for a whole state. It is in venues like this one where I think the anti-combustion/anti-biomass sentiment poses the greatest danger to our sector. The good news is, this is a much smaller audience and one that we can and must educate on the carbon benefit of our product.
Expect more on this topic and how it is manifesting itself in ways that could be detrimental to our long-term prospects as a sector.
October EIA Data Recap –
The EIA just published the October data for their Monthly Densified Biomass Fuel Report. My early hot take.
At 225,760 tons sold nationwide, wood pellet sales fell short of the October average (242,367) but did offer a nice bounce from last October’s dismal 188,506 tons. I’ve been archiving the HDD index each week. Except for markets in the PNW, HDDs at that time were well ahead of the year before which certainly supports the year-over-year bounce. That logic isn’t supported for sales in the West however as this year (56k) was stronger than last (51k) despite a significant deficit in HDDs (in Spokane and Baker City at least).
Total production in the U.S. was 175,494 tons. This is better than last year but well off the 218,864 of 2019 and the 194,176 of 2020. The 122,447 tons produced in the East are notable. While not the “most ever” for October, it achieved second best in the report’s history in the region. I suspect some of that throttle was connected to overseas demand.
Inventory in October closed out at 143,089 tons. In the winter of 2018-19, the industry saw an October – February inventory depletion of 160,000 tons so I suppose it’s possible we may see the low fuel light come on this heating season, but I’m doubtful. While the data is only current through October the anecdotal reports I’ve heard from producers combined with the data from the PFI HDD Index would suggest that as temperatures have moderated and HDDs worked back toward the mean, pellet sales have slowed. About everyone I’m talking to is wishing for colder temps as momentum in the category has fallen off.
I’m ready to trade the regular occurrences of heavy, wet snow we’ve been receiving in the Rockies and Upper Midwest with a run of dry but cold (maybe even frigid) temps. 28 degrees and 6-inch, heavy wet snowfalls are a two-time loser for this homeowner/chief shoveler/heating fuel professional.
Note to Old Man Winter: Less Snow, More HDDs, please.
—Tim Portz Executive Director
Save the Date 2023
Pellet Fuels Institute Standards Program:
Reviewing the New Look and Administration of the World’s Most Robust Wood Pellet Quality Program
Wednesday, February 15, 2023
10:00 – 11:00 am Central time
The Pellet Fuels Institute Standards Program was established over a decade ago to provide certainty to pellet retailers, consumers and appliance manufacturers of consistent, high-quality pellet production. Developed in concert will wood pellet producers, appliance manufacturers and quality assurance professionals the PFI Standards Program gained rapid adoption across the United States, standardizing quality control measures across the industry and introducing regular third-party testing and audits to wood pellet production. In 2022 the program underwent its first major revision since its inception. Join us for this webinar where the very noticeable changes to the consumer facing Quality Mark as well as some less public but important changes in the accreditation structure underpinning the program.
Speakers:
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Tim Portz,
Executive Director, Pellet Fuels Institute
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Chris Wiberg,
Vice President of Laboratories,
Timber Products Inspection/Biomass
Energy Lab
(Standards Committee Chair)
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